VA Loans Versus Other Loan Programs And Mortgage Guidelines
This BLOG On VA Loans Versus Other Loan Programs And Mortgage Guidelines Was Written By Gustan Cho NMLS 873293
There are huge advantages of VA Loans Versus Other Loan Programs.
- VA Loans are probably the best mortgage loan programs in the United States
- However, not everyone can qualify for a VA Loan
- Need to be a veteran of the United States Armed Services with a Certificate of Eligibility to be able to qualify for a VA Loan
In this article, we will cover and discuss VA Loans Versus Other Loan Programs And Mortgage Guidelines.
Benefits Of VA Mortgages
Here are some basic advantages of VA Loans Versus Other Loan Programs:
- VA Loans do not require any down payment on a home purchase
- A veteran homeowner can get a 100% LTV Cash-Out Refinance Loan with a VA Loan with no mortgage insurance needed
- VA Loans are guaranteed by the United States Department of Veteran Affairs
- VA is not a lender and does not originate and fund VA Loans
- Private lenders are the institutions that originate and fund VA Loans
- VA guarantees those lenders in the event of borrower default
- Institutions who originate, process, underwrite, fund, and service VA Loans are banks, credit unions, and mortgage companies
- Lenders can offer low-interest rates and easy lax lending requirements on VA Loans
- This is because they know that VA will guarantee VA Loans that go into foreclosure so their losses are limited
There is no question of the great benefits of VA Loans Versus Other Loan Programs.
VA Loans Versus Other Loan Programs On Down Payment
VA does not require any down payment and offers 100% financing for veterans.
Here are the benefits on a down payment on VA Loans Versus Other Loan Programs:
- FHA requires a minimum down payment of 3.5% down payment on home purchases
- Both Fannie Mae and Freddie Mac require 3% to 5% down payment on Conventional Loans
- USDA does offer 100% financing
- Lending requirements on USDA Loans are tougher than VA Loans
- Cannot purchase any property you like on any location
- The property needs to be in a USDA Rural Development designated area
- There is debt to income ratio restrictions
USDA also has maximum household income requirements as well as credit score requirements.
Mortgage Insurance On Government Loans
FHA Loans and USDA Loans require mandatory mortgage insurance premiums.
- Fannie Mae and Freddie Mac require private mortgage insurance on loans with less than 20% equity
- VA Loans offer no down payment
- 100% financing and no mortgage insurance premium
- VA does have an upfront one time VA Funding Fee
- VA Funding Fee can be rolled into Loan balance with no money out of the veteran’s pocket
- VA Loan Limits are much higher than FHA
VA no longer has a maximum loan limit cap on VA Loans.
VA Loans Versus Other Loan Programs On Debt To Income Ratio Requirements
VA Loans Versus Other Loan Programs on debt to income ratio requirements are much more relaxed. Most lenders will have overlays on debt to income ratio on VA Loans.
However, here are the rules on debt to income ratio on VA Loans Versus Other Loan Programs:
- VA does not have a debt to income requirements
- Debt to income ratio requirements are set by the individual lenders
- The Team at Gustan Cho Associates specializes in originating and funding VA Loans With High DTI
- We have closed on VA Loans with debt to income ratios as high as 60% DTI and credit scores down to 580 FICO
- This holds true as long as the veteran homebuyer has strong Residual Income and get an approve/eligible per AUS
- Gustan Cho Associates does not have any overlays on VA Loans
- There is no minimum credit score requirements or debt to income ratio caps on VA Mortgages
Gustan Cho Associates Mortgage Group closes most of its VA Loans in 21 days or less.
VA Loans Versus Other Loan Programs With Mortgage Interest Rates
VA mortgage rates are generally lower than any other loan program in the country. VA interest rates do have pricing adjustments like other mortgage loan programs. Mortgage rates on VA Loans Versus Other Loan Programs are lower.
Here is what determines VA mortgage interest rates:
- The higher the borrowers credit scores, the lower the mortgage rates
Type of property:
- Single family homes have the lowest mortgage rates
- Two to four unit properties have pricing adjustments
- Have higher mortgage interest rates since it is considered riskier investments for lenders
- The amount of down payment does not matter
- This because VA Loans are guaranteed by the U.S. Department of Veteran Affairs
Qualifying For VA Loans Versus Other Loan Programs
The Gustan Cho Team at Gustan Cho Associates does not have any overlays on VA Loans. Gustan Cho Associates Mortgage Group is nationally known for closing VA Loans With No Overlays in 21 days or less.
Here are the VA Loan Requirements at Gustan Cho Associates:
- No minimum credit score requirements
- No debt to income ratio requirements
- With an approve/eligible per Automated Underwriting System, Gustan Cho Associates at Loan Cabin will just go off findings of the AUS
- No overlays on VA Loans
- Most lenders have overlays on VA Loans such as minimum credit score requirements between 620 and 640 and maximum debt to income ratio overlays
- Gustan Cho Associates does not have any overlays on government and conventional loans
Borrowers with any questions on qualifying for a VA Loan, feel free to contact us. Gustan Cho Associates is a five star national VA lender licensed in multiple states. We are nationally known for its 21 day closings and not having any overlays on all government loan programs as well as Conventional Loans. Reach out to us at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org.